The UK's grocery market saw growth slide to its slowest pace since 2005 as Morrisons, Asda and Tesco continue to take a battering from discounters and the upmarket grocer Waitrose.

Both Morrisons and Tesco saw sales fall, by 2.5% and 0.4% in the 12 weeks to 2 February according to the latest figures from market analysts Kantar Worldpanel. While Asda's sales rose 0.5%, the Walmart-owned grocer still lost share because its performance was below the 2.4% growth achieved by the market as a whole. Market growth was partly held back by a slowdown in inflation, to 2.1%, suggesting that the volume of groceries sold was virtually flat year on year.

Fraser McKevitt, retail analyst at Kantar, said: "Grocery market growth slipped slightly indicating that brighter economic prospects are yet to be seen in the nation's shopping trolleys. The slowest industry growth since 2005 made it hard for many of the biggest retailers to increase sales."

Growth was led by discounters Aldi and Lidl, which continued to eat up market share with sales up 32% and 17.2% respectively. The independent frozen foods store chain, Farm Foods, also continued its stellar growth – the fastest in the market at 43.9%. Sainsbury's was the only one of the major grocers to increase market share, but it still sits in third place behind Asda, according to Kantar's figures.

Richard Clarke, an analyst at Bernstein, said Sainsbury's continued to stand out from its rivals. He added: "These figures show that Morrisons has lost its way. It used to be a retailer which stood for good value and fresh food credentials. Now it exhibits neither value or quality and it can't survive in this market. It needs a new strategy."